With Sony and Nintendo expected to make major hardware announcements in the mobile gaming field on Tuesday, Microsoft was keen to stress that its software skills had made it a "clear leader in innovation".

New services

Robbie Bach, Microsoft's chief Xbox officer, told the assembled media and trade delegates that the firm had sold more than 14 million consoles and had almost one million subscribers to its online service, Xbox Live.

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"Software is how we have innovated and software is how we will lead," he said.

Microsoft also announced that it was working to add video chat facilities to its online service.

"We believe video chat is the next logical step in online gaming," said Microsoft's Jay Allard.

The service is being tested in Japan before roll out to the rest of the globe, he said.

In a bid to attract more casual, possibly older, gamers Mr Allard also announced a new service, Xbox Live Arcade.

The service will let people download classic arcade games, reportedly for a fee, which can then be played online.

"It is perfect for the gamer who does not have a lot of time," he said.